We are a nation of 325 million people. We have a bit of control over the behavior of our 535 elected representatives in Congress, the president and the vice president. But there are seven unelected people who have life-and-death control over our economy and hence our lives -- the seven governors of the Federal Reserve Board. The Federal Reserve Board controls our money supply. Its governors are appointed by the president and confirmed by the Senate and serve 14-year staggered terms.
Twin toadying: New York Times political reporter Amy Chozick relished Hillary Clinton and other women D.C. liberal feminist figures (both in and out of power) in two stories Sunday, one on the front of Sunday Styles and one on the front of Sunday Business. Chozick, who led the paper’s coverage of Hillary Clinton’s failed presidential campaign, couldn’t help fawning over Clinton even in a mildly critical story.
On Thursday, Federal Reserve Chairman Janet Yellen suggested in a videoconference call, as translated into plain English by the Wall Street Journal, that "there could be benefits to allowing the central bank to buy stocks as a way to boost the economy in a downturn."
The Federal Reserve, Fed Chair Janet Yellen, and the ever-cooperative Associated Press have a message for America: "If there's an economic downturn, even one that turns into a recession, it's going to be the rest of the world's fault. The U.S. economy is fine, and it will stay fine if everybody else doesn't ruin it."
As the AP's Martin Crutsinger reported today ("YELLEN: TOO EARLY TO DETERMINE IMPACT OF GLOBAL DEVELOPMENTS"), Yellen told members of the Senate Banking Committee that, in Crutsinger's words, "that global economic pressures pose risks to the U.S. economy," and that the Fed will wait until its next meeting to see "how much economic weakness and falling markets around the world have hamstrung U.S. growth." Folks, to "hamstring" growth, you've got to have growth, and the best estimates at the moment are telling us that at the end of last year there either wasn't any, or that it barely existed.
Over the past several months, economics reporters at the Associated Press have told us time and time and time again that the U.S. economy is "largely insulated" from adverse economic developments overseas.
So why is the AP's Martin Crutsinger going along with the now-shifting conventional "wisdom" that Janet Yellen's Federal Reserve may have to defer implementing additional interest-rate increases for quite some time because of what the wire service headlined as a "darker global economy"? The obvious answer is that the U.S. economy is also weak, and the business press simply won't admit it.
The business press just can't understand why the Federal Reserve decided not to raise interest rates on Thursday. After all, these alleged journalists have been telling us for months bordering on years that U.S. economy is really in good shape. So it should be able to handle a rate hike, especially after over seven years of rates at essentially zero. The problem is that they now believe their own bogus blather. The U.S. economy is not in good shape, and data seen during the past several weeks show that the situation is deteriorating, not improving.
Excerpts from an early Friday report at the Associated Press by Josh Boak illustrate how out of touch the business press really is (bolds and numbered tags are mine):
The business press is trying to convince readers, listeners, and viewers that Janet Yellen's Federal Reserve kept interest rates at zero not because of U.S. economic conditions, which supposedly "look good" with "steady economic growth." No-no. She stayed the course because of the troubled tglobal economy.
Thursday evening, Reuters wrote that the Fed failed to move "in a bow to worries about the global economy, financial market volatility and sluggish inflation at home." Bloomberg directly blamed "China growth concerns." The Associated Press's Martin Crutsinger cited "a weak global economy, persistently low inflation and unstable financial markets." None of the three noted the deteriorating situation in the U.S., and the only item I could find which cited the Fed's full set of pathetic annual U.S. growth projections was a Wall Street Journal editorial.
Imagine if, in 1987, a Federal Reserve official could have pointed to a poorly performing economy and said, "Gee, this supply-side economics hasn't worked out very well." The press would surely have treated the story as a front-page item and ensured that it got air time on the Big Three networks' then-dominant nightly news broadcasts. Of course, there was no such credible report, because the economy under Ronald Reagan was so obviously robust.
Fast-forwarding 28 years, the author of a July Federal Reserve white paper on the Fed's Keynesian-based "quantitative easing" program contends that "There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed—inflation and real economic activity." In other words, there is no evidence that $4.5 trillion in funny money with which the economy has been saddled has accomplished anything. In the establishment press, only CNBC's Jeff Cox has covered it (bolds are mine):
An unbylined "Q&A" column at the Associated Press yesterday began with the following false declaration: "The $4 trillion experiment is over." That just isn't so.
Maybe the Federal Reserve is done building up its debt holdings — that is by no means certain — but the "experiment" known as "quantitative easing," or "QE," won't be over until the Fed fully unwinds those balances. In the meantime, it has unwarranted leverage over the stock and bond markets. Fed Chair Janet Yellen has what appears to be a de facto veto over Washington policies she doesn't like should she decide to use her leverage in that manner. The rest of the AP item wasn't much better, particularly how it wormed around the reality that if the Fed wishes to avoid winding down its balances, it's going to have to keep buying Treasury and mortgage-backed securities as current holding mature:
The Associated Press's Top Business News page lists the headlines and opening passages of what the wire service believes are the ten most important business stories at the moment. Its 9:16 a.m. version had a story entitled "JACKSON HOLE DEMONSTRATORS RALLY AGAINST RATE HIKE" listed fifth. Earlier in the morning it was fourth.
Surely, I thought to myself, this must be about a group of at least several hundred to merit this level of attention. Not at all. The opening sentence at Matthew Brown's Friday afternoon story tells us it was "a group of about 10," but that one group member somehow got to speak with Federal Reserve Chair Janet Yellen (bolds are mine):
In a Friday afternoon dispatch issued in the wake of the government's jobs report earlier that day, Christopher Rugaber and Josh Boak at the Associated Press wrote that "most economists ... forecast a strong rebound in economic growth - to a 3.5 percent annual rate in the current April-June quarter. And growth should reach nearly 3 percent for the full year, up from 1.9 percent in 2013, they expect."
There are two problems with that prediction. The first lies in how strong the third and fourth quarters will have to be for the economy to get "nearly 3 percent" for the full year, given the tiny first-quarter annualized growth of 0.1 percent reported on Wednesday. The second and perhaps more crucial issue is that the full-year estimate significantly exceeds the "altered assessment" at the Fed concerning how fast it thinks the economy can grow without running the risk of igniting inflation.